ECONOMICS
TECHNOLOGY
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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Keep prices low
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raise prices
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lower the quality of their products
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raise the costs of production
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Detailed explanation-1: -Greater competition among sellers results in a lower product market price. If the same popular toy had numerous producers instead of only one, the price would be lower because the producer knows the consumer could get the toy somewhere else. The cycle of competition between sellers never ends.
Detailed explanation-2: -Basic economic theory demonstrates that when firms have to compete for customers, it leads to lower prices, higher quality goods and services, greater variety, and more innovation.
Detailed explanation-3: -Competition-driven prices are often market-oriented and are set based on how others are pricing products and services in the marketplace. So, the seller makes a decision based on the prices set by its competitors. Prices between competitors may not necessarily be the same; one competitor may end up lowering its price.
Detailed explanation-4: -These forces include the number and power of a company’s competitive rivals, potential new market entrants, suppliers, customers, and substitute products that influence a company’s profitability. Five Forces analysis can be used to guide business strategy to increase competitive advantage.